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Saturday, August 31, 2013

Leonard Read in this chapter talks about inward freedom particularly in relation to looking down on someone. This is a difficult temptation to resist especially these days where discussions in social network are widespread. Most people are in the habit of name calling when they observe that someone does not see what they see or people are saying things they don't approve (p.11).

Perhaps the way Read labels the ability to overcome the above temptation as inner freedom is something unpopular to many, but the essence of it is not new. Read claims that he based his concept from the New Testament referring in particular to the warning of the Lord in the Gospels, "...whosoever shall say, Thou fool, shall be in danger of hell fire."

Read has a high regard for the New Testament especially the Sermon on the Mount. Two psychiarists served as his guides in this kind of perception. They are Dr. Fritz Kunkel and Dr. James T. Fisher (p. 12). He shared with Dr. Kunkel's belief about the New Testament:

"But we have only one book which gives us the full description of the human situation, and of the way leading through all troubles and frustrations, and finally into utmost light. It is the great textbook of depth-psychology: The New Testament" (ibid.)

I just wonder why the Old Testament is not included. Anyway, to continue in despising others, says Read, will actually harm you more than the person whom you despised. You will have a new enemy. His mind will be closed to you no matter how insightful your words are. He will no longer listen to you. Read equates this in sinking your own ship (p. 15).

And then Read mentioned about four prayer concerns. I find the first prayer concern very personal, the noble desire to straighten out someone's thought (p. 16). Inner freedom can never be achieved unless we learn to let go of that desire to manage someone's life. A "know-it-all person" will always remain a stranger to this kind of freedom. And so I made this prayer: " I am an angry man. I am a know-it-all person. I ask for forgiveness Lord. Make me a loving person instead. Grant me the grace of humility to see my mistake."

Indeed, "The better world begins with that man who attends to his inner freedom" (p. 17). Amen!

This new discipline of keeping a daily journal was ignited by my reading of Leonard Read's books. Three days ago, I wrote in my journal that I read three chapters from three separate books. They are "Vision", "Thou Fool" and "Life's Greatest Occupations". And so today, since my remaining task for tomorrow's worship is just to include two songs in the PowerPoint presentation, I now have sufficient time to start writing about my thoughts about these three chapters. Let me start with "Vision".

-----o-----o-----o-----

The man was Lord Tennyson. Leonard Read described him as a man of vision, of foresight. Such foresight is an outcome of politico-economic knowledge (p. 4).

To demonstrate the power of vision, Read cited the experience of the Pilgrims when they landed at Plymouth Rock. There was no development that time, but after seven generations, numerous countries were amazed and sent their delegates to inquire about the key to the Pilgrims' prosperity. Among four reasons, two caught my attention. Actually, they can be summed up in just one - limited government.

If the government task is just confined in keeping the peace and pursuing common justice, that would be good for society and for economic development. Once the government transgressed this boundary, social and economic woes are the inevitable results. The modern day ideas that the government is perceived "as the endower of the rights to life and livelihood" (ibid.) are basically idolatrous. The state has usurped the rightful place that belongs only to God. Such ideas unless corrected will produce nothing but the erosion of society's moral fabric and increasing poverty.

Read without claiming such foresight, made prediction nonetheless, a very unfortunate prediction. He saw not a bright future, but economic disaster due to the increasing power of the government through socialistic means:

"I can foresee not the wonders but the disaster that lies ahead if our present decline into planned economy and welfare state-socialism continues" (ibid.)

Friday, August 30, 2013

So cruel...so inhuman...people made in God's image are now being destroyed there in Syria for reason I don't know...whoever is responsible for these atrocities no longer respect international law and human lives...lovers of freedom should unite to root out the ideas that caused such crimes...

Companies and banks are also financially healthier...All signs so far - from manufacturing to consumer spending - are pointing to a firmer rebound, not just in the US but also in other recently stagnant developed economies like Europe and Japan...So while Asia may be in for a rocky ride as the US eases out of QE, most economies are in a good position to manage the adjustment without giving in to fears of a new crisis. - The Korea Herald

Fiona Chan wrote the "Fears of Asian financial crisis may be overblown" at The Korea Herald dated August 29, 2013. Her article attracted my attention for it is about the economic situation of Asia and contains materials related to the Philippines. She thinks that Asia has nothing to fear for it has strong economic fundamentals and actually have experienced "boom for the last three years". Countries, which she identified as strong include Taiwan, Philippines and South Korea. In fact, she also thinks that the US, EU and Japan were already out of recession pit and on their way to recovery.

My reading of Austrian analysis about Asian economy leads me to a different conclusion from Chan. If she thinks that those who see a repetition of the Asian financial crisis in the coming years are misguided, Austrians think that a far greater crisis is actually approaching. We just do not know when. It depends on several factors particularly in relation to the political and economic move of the US. But either way, we cannot escape a far serious economic bust.

Even reading Chan's article, you will see a hint about the kind of monetary system that we have right now. She said that "if the authorities tighten monetary policy to stabilize currencies or reduce inflation, that risks sapping economic vitality." This is an admission that existing monetary system is unstable. Any attempt to stabilize it will make the situation worse. So the tune that we are playing now is to allow lose monetary policy and let inflation has its way.

You can detect another indication that we are not in a healthy condition when she quoted one economist saying " 'Asian economies have been on a steamroller boom for the last three years, and the fact is that many Asian economies are fundamentally on a much firmer economic footing this time around. '... they do not 'appear to be in danger of falling into an outright currency crisis.' " From Austrian point of view, this is exactly the one to fear - the boom she is referring to for it is caused not by sound business practices, but by credit expansion. After this, bust follows depending on the length of the impact of the easy money injected to the economy in the first place. So I assume that if we could interview an Austrian, he would say "It's actually the reverse: Asian economies are on a more serious and shaky economic footing right now."

If Chan saw that the world economy has already escaped the 2008 crisis, for an Austrian, the crisis has never been solved. It was actually expanded...

Thursday, August 22, 2013

"The great practical advantage of the Austrian School is that it is a form of economic analysis that is founded in realism and helps us understand both progress and problems in the real world. Therefore, it is a useful tool for people in the real world, but is of little use, and indeed is a threat, to mainstream academic economists" (Hulsmann and Kinsella, eds., "Property, Freedom and Society", 2009, p.358).

Monday, August 19, 2013

It all depends on how long investors are willing to suspend their disbelief over the facts in Japan: an impossibly large debt load, an aging population and a propensity for political paralysis. Were that moment of clarity to arrive, the global economy would be shaken by the worst debt crisis in history. Forget Greece -- Japan’s debt burden is larger than that of Germany, France and the U.K. combined. - Bloomberg

The governor of Japanese Central Bank, Haruhiko Kuroda has done something magical, says William Pesek. This miracle refers to the act of "creating the biggest bubble in history", the act of printing money that caused Japan now to reach its 1 quadrillion yen debt.

Ben Bernanke, said Pesek, wanted to know Kuroda's secret. The secret has two forms - "transfering money via monetary policy from citizens to the government" and "monetization of public debt". Kuroda learned this secret from Japan's finance minister during the Great Depression, Korekiyo Takahashi.

It is critical that this secret must be kept hidden for once known, will arouse public anger. The longer the secret is hidden from the public, the better Shinzo Abe can apply his own magic "of deregulating the economy."

Pesek claims that as long as investors trust Japan, everything will be fine. But once reality starts to sink in, world economy will be in big trouble. It "would be shaken by the worst debt crisis in history." So the magic must continue for it " ' is the last chance for Japan's economy.' "

Pesek was amazed how Kuroda's magic silenced those "mysterious cast of characters", "the bond vigilantes", "the skeptics". Perhaps, they were hypnotized staring that instead of reducing debt, Kuroda doubled it. For the governor, this is the way to secure the nation's finance, by redistributing wealth from the people to the government.

Personal Response:

There are several things that I find difficult to accept in reading this Bloomberg article. I find it hard to understand why Pesek keeps on describing both "financial repression" and "monetization of debt" as magic to be kept in secret and yet such information was accessible to the public. Is it because the Japanese public are incapable of comprehending the intricacies of this type of monetary policy?

Pesek also said that once this secret is known to the public, anger would be the natural response. If Robert Reich mentioned about American's anger and confusion as to the real cause of their economic trouble, Japan on the other hand remains calm due to lack of public awareness. Moreover, Robert Reich also specifies that in order to pacify American's dissatisfaction and anger, politicians must look for scapegoats. Capitalists are one. And I think Japan is another. Here, it's difficult to go beyond the mere appearances of current events. It is as if the original magician in the person of Bernanke appears to be innocent and has nothing to do with the present condition of global economy; it also appears as if in case that global economy will crash this time, the Federal Reserve has found a scapegoat in the Bank of Japan; and it is also as if the global economy is not in present trouble and it would be Kuroda's fault once the economy would be "shaken again".

Finally, William Pesek clearly identified the real nature of the popular web message about "redistribution of wealth". It has something to do with the transfer of wealth "from creditors (the people) to debtors" (government). There are Christians today who think that this redistribution of wealth particularly pertains to the trasfer of wealth from the "wicked" into the hands of the "righteous" originally taken from the Bible, specifically the book of Exodus. There we read that Egyptians gave articles of gold and silver to the Jews. So they are expecting this to happen soon and mistakenly thought that they will benefit from it. They have no idea that the biblical reference has nothing to do with the impending collapse of existing monetary system. It's sad to see Christians fall in such a low state of mind.

Robert Reich claims that the Americans are so angry right now and "more contemptuous of almost every major institution - government, business, the media." He identifies several factors that contribute to the spread of this negative emotion. He mentioned first the impact of irresponsible online remarks using social media. Net surfers too enjoy watching gladiatorial fights. And add to it the absence of public figures to convincingly explain what's going on. And then he finally specified that the source of anger is economic in nature. Reich described this economic cause:

"Meanwhile, income, wealth and power have become more concentrated at the top than they’ve been in 90 years ... As a result, many have come to believe that the deck is stacked against them. Importantly, both the Tea Party and the Occupier movements began with the bailouts of Wall Street ― when both groups concluded that big government and big finance had plotted against the rest of us. The former blamed government; the latter blamed Wall Street."

Reich saw that such economic inequality described above is very dangerous. However, Americans due to emotional response failed to identify the real cause for their misery. In a way, Reich implies that politicians have been successful so far in using anger to divert the mind of the people from real issues.

Personal Response:

Robert Reich failed to mention precisely the object of Americans' anger. I suspect that though he did not mention, by implication, the capitalists are to blame. He simply emphasized the evil and danger of economic inequality, but failed to point out the real source of such inequality. And also I can't understand why he is lamenting the absence of "trusted arbiters of truth" to convince the American people. He is either not listening to Ron Paul's analysis or finds the message of the retired libertarian Congressman not really convincing. Maybe, he is looking for a "trusted" voice coming from the establishment.

Friday, August 16, 2013

The study of India's economy from free market perspective deserves a careful attention. Since 1946, the year of India's political independence, Indian economists have been debating about the most suitable economic system for the country. The three major contenders were the Gandhian model, the Bombay Plan, and the Nehruvian model.

The Gandhian model is based on "village economy" and "trusteeship". The Bombay plan is interventionist. And finally, the Nehruvian model is socialistic. Nehruvian model won and reigned over the next 40 years.

The Indian crisis of the 1990s was simply a product of Nehruvian model. Among many Indian economists, only Bellikoth Ragunath Shenoy saw the destructive destination taken by his country. Shenoy was a student of F. A. Hayek (who was formerly a socialist but changed his mind after studying the writings of Ludwig von Mises) and a member of the prestigious international forum in the tradition of classical liberalism, the Mont Pelerin Society.

At present, the free market ideas of Shenoy such as liberalization and economic globalization are being used by India, which have resulted to two decades of economic growth. Unfortunately, Shenoy remains an economic prophet who hasn't received the honor that is due him from his own people.

Saturday, August 10, 2013

The prophet Isaiah said, "How beautiful on the mountains are the feet of those who bring good news, who proclaim peace, who bring good tidings, who proclaim salvation, who say to Zion, 'Your God reigns!'" (52:7).

The gospel, peace and the reality of God's reign are inseparable themes in this prophetic declaration. Reading this prophetic message, I could not avoid thinking about man's current quest for peace apart from the gospel. Is it really possible? Is it really possible to have peace without believing that God is still on his throne? Is it really possible to have peace when the ruling ideology in the academe is one of atheism, humanism, statism and antinomianism? Is God reigning in religion and theology? Isn't the trend now one of inclusivism and denial of the exclusivity of Christianity? How about in economics and monetary policy? Isn't the dominant monetary policy for so long one of dishonesty and currency debasement that wars against savings and robs workers of the fruit of their labors? How about the family? Isn't the idea of the family now under attack and the state has redefined its meaning that even same sex marriage is considered legal? Similar thing is happening in other spheres. How can genuine peace exists when the entire world is declaring an all-out war against God and His word?

Monday, August 5, 2013

I assume that most Filipinos are not aware about the significance of the recent bankruptcy of Detroit city. For them, it is purely an American affair.

I personally believe that there are lessons to learn from Detroit's downfall. In this post, I just want to identify three:

The Reason for Detroit's Bankruptcy. I find at least three interpretations as to the cause of Detroit's ruin. The most popular interpretation is the one propagated by the likes of a Nobel Prize Winner, Paul Krugman. For him, it is the fault of the free market and Detroit is simply a victim of free market forces. Yes, he accepted that bad governance contributed to the destruction, but primarily, free market is the one to be blamed.

The owner of a blog, Mont Pelerin World does not see the role of free market in Detroit's failure not unless you equate free market with the automobile industry. To him, three forces caused the bankruptcy. Together with automobile industry, the other two forces are horrible government and labor union.

Another writer, Robert Morley shares a different opinion. For him, the key to understand the situation of Detroit is to grasp first the reason for its previous prosperity. Morley accepts the importance of the dynamics inherent in free market economy, but they don't provide the complete explanation. The role of God and the keeping of his commandments are central in his understanding of Detroit's prosperity. And since God's commandments have been broken in terms of tax increases on businesses and productive individuals and the act of redistributing wealth., bankruptcy is an inescapable result.

Clarity in understanding the cause of Detroit bankruptcy is relevant not only for US economy, but also for other countries as well. This is especially true in our days when mainstream media keeps on feeding the public that capitalism is largely to blame for global economic woes. Not many people are able to distinguish between state "capitalism" and free market capitalism.

The Role of Expanding Power of the Government. The failure to distinguish between two types of capitalism is due to inability to see the role and impact of government interference to the economy. Interventionism is the common term used by free market thinkers to describe this act of economic interference. Interventionism is an essential feature of statism.

Broadly speaking, statism stands for a political ideology that the government has the ultimate source of power and authority when it comes to the formulation of social and economic policy. Daniel Hannan claims that statism is actually responsible for the Detroitification of the USA. I cannot avoid to think that perhaps, behind the smokescreen of poverty and corruption as the two primary problems in the Philippines, statism is its ultimate political source.

The Role of Progressivism. This is the third lesson I think we have to learn from Detroit's downfall, that ideas, particularly bad political and economic ideas lead into ugly results.

Actually, this article is an offshoot of a thread in a Facebook group. I started a thread asking the question, "If there is any, what lessons can we learn from Detroit bankruptcy?" As the interaction grew, one commenter responded, "I think progressives are heading to statism." I affirmed his answer and another commenter asked, "What's your basis for saying that statism is the direction of the progressives and who are these progressives?" The first commenter replied, "You already engaged with them in previous discussions. The progressives are all "'cause-oriented groups' and those identified with the left."

I find the questions of the second commenter difficult and so I read further looking for answers. And I came up with two ways to answer his questions: based on personal observation and based on the history of progressive movement in the US taken from three articles.

Personal Opinion

First, based on my personal opinion, progressives are usually identified with the political left. However, since the collapse of Russian version of socialism in 1989, socialism took a progressive form and identifying progressives right now is not an easy task. But there are hints to recognize them. Simply pick up a newspaper and look for sentences or phrases advocating government's action to interfere in national economy, I think you can find a progressive promoting a statist solution. Sentences like these are now common place: " I urge the government to institutionalize _________"; "The government can expand the program further to provide capital to poor families", and; "Mr. _______ has asked the Aquino government to create a/an _________."

First Article

C. Jay Engel of Reformed Libertarian wrote the first article. He said unlike in the past, it is not easy these days to identify labels whether it be political or theological for there are stories behind those labels.

His understanding of the history of progressive movement started in 19th century. The battle in politics during those times was between leftists (classical liberals advocating limited government, which is also synonymous now with libertarianism) and rightists (conservatives advocating big government, which I call statism). Unfortunately, the liberals neglected their intellectual roots. And due to the influence of Darwin's theory borrowed and applied by Marx in understanding society, the belief in the attainment of an ideal world through socialism became popular. In short, in 1901 to 1914, liberalism was abandoned and replaced by progressivism.

The classical liberals who had been replaced were constitutionalists and since they were thrown out of their political house, in time they found a home among the conservative camp who strongly opposed progressivism. So based on Engel's story, "progressives took over the title of liberalism and the true liberals found a way to call themselves conservatives based on their commitment to the American tradition of life, liberty, and property." So now, in the US, liberalism means progressivism and answering the question of our commenter, we can say that progressives in the Philippines are those who propagate in the country the ideas of US liberalism.

Second Article

Walter Williams wrote "Liberals, Progressives and Socialists". Following Ludwig von Mises' analysis, Williams thinks that both communism and Nazism are two different forms of socialism. He was surprised why the crime of Nazism received international condemnation and yet the communist form of socialism appeared to be exempted from such despite the high rate of its victims, which was estimated to reach 138 million. He suspects that it is due to high regard given to Mao Zedong among American intellectuals. I suspect the same thing when it comes to Marx's ideas.

Williams added, perhaps contemporary leftists, socialists and progressives would argue that their agenda is far different from that of the Nazi, Soviets and Maoists. But as for him, the test for a tyrannous government is not only confined in the existence of death camps and wars of conquest, but the belief in the "primacy of the state over individual rights."

He left a warning: "The unspeakable horrors of Nazism didn’t happen overnight. They were simply the end result of a long evolution of ideas leading to consolidation of power in central government in the quest for 'social justice.' ” At present, in the US, there is a "massive consolidation of power in Washington in the name of social justice." So for him this is the appropriate question, which I think is also applicable to the Philippines: "Which way are we headed tiny steps at a time — toward greater liberty or toward more government control over our lives?"

Third Article

This article caused me headache. It is very long and I find it hard to make sense of all the details in it. Murray Rothbard wrote this, "The Progressive Era and the Family" and he gave a complex and more detailed historical background of progressive movement.

For Rothbard, to confine the origin of progressivism during 1900 to 1914 does not provide the complete picture. He mentioned two movements that are not usually associated with progressivism - these are mercantilism and revival movement.

Based on Rothbard's narration, the revival movement during the 1830s played a big role in the birth of progressivism. This movement was opposed to "creedal Calvinist churches that stressed the importance of obeying God's law as expressed in the church creed." For this movement, creeds, rituals and liturgies are not important. Rothbard called this movement new "Pietism" and it has two different forms - "salvationists pietists" of the South and the "evangelical pietists" of the North, the territory of the Yankees.

Since this movement removed the law of God as expressed in church creed from its previous place in society, but considered social sanctification as its mission, the remaining option to accomplish this mission was to use the power of the state. Exactly at this point, Rothbard described "evangelical pietists" as "natural 'cultural imperialists,' people who were wont to impose their values and morality on other groups; as such, they took quite naturally to imposing their form of pietism through whatever means were available, including the use of the coercive power of the state."

Rothbard mentioned some of the important features in the Progressive movement. They are the following:

Use of both pietistic and scientific arguments to achieve the pietist goals

Social gospel movement

Increase of government contracts to business

Taxpayer-financed welfare state

Expansion of the power of the public school

Expansion of the power of the state over the family, and

Eugenics movement

Rothbard's story is very interesting, but long. I just selected sections in it relevant to the questions of the second commenter:

"Progressivism was, to a great extent, the culmination of the pietist Protestant political impulse, the urge to regulate every aspect of American life, economic and moral—even the most intimate and crucial aspects of family life. But it was also a curious alliance of a technocratic drive for government regulation, the supposed expression of 'value-free science,' and the pietist religious impulse to save America—and the world—by state coercion."

"All these trends reached their apogee in the Progressive party and its national convention of 1912. The assemblage was a gathering of businessmen, intellectuals, academics, technocrats, efficiency experts and social engineers, writers, economists, social scientists, and leading representatives of the new profession of social work."

"In short, the Progressive Era re-created the age-old alliance between Big Government, large business firms, and opinion-molding intellectuals—an alliance that had most recently been embodied in the mercantilist system of the sixteenth through eighteenth centuries."

So I think, if we find it difficult to identify progressives today, it is not because they are few. I think they are everywhere....

Saturday, August 3, 2013

Jack McHugh coined the term "Detroitification" in 2007 referring "to the destruction of a city, state or nation through draining money from hardworking individuals to pay for the cushy compensation and retirement of unproductive public 'servants.' " Robert Morley used this term to describe the bankruptcy of Detroit city.

Last July 30, Morley wrote an article about Detroit bankruptcy. He described Detroit as "one of the most prosperous cities in the world" in the past and turned into "one of the world’s poorest", and "a post-Apocalyptic ghost town, a post-industrial ruin, the city of flames, the city where the sirens never stop, America’s first Third World city, Murder Town, Hell on Wheels." What is the primary cause for such a radical change? In his article, Morley did not hesitate to contradict a popular opinion propagated by a Nobel Prize Winner, Paul Krugman.

For Krugman, Detroit was a victim of the free market. Even though he recognized the contribution of bad governance, but to his mind, the primary cause of Detroit's downfall originated from the free market. And such idea is widely accepted these days.

But Morley has a different mind about Detroit. The key to understand the situation of Detroit is to grasp first the reason for its previous prosperity. Morley accepts the importance of the dynamics inherent in free market economy, but they don't provide the complete explanation. For him, the role of God and the keeping of his commandments serve as the basic foundations for Detroit's prosperity. And since God's commandments are being broken, the inescapable consequences are the removal of external blessings. I understand this breaking of God's commandments in terms of tax increases on businesses and productive individuals and the act of redistributing wealth. Many called it theft and the growth of the politics of envy. The final result of such violation was to drive businesses away and unemployment. And according to Morley, such economic philosophy is now being nationalized all over America. In his mind, Detroit should serve as a warning for all Americans for he sees similar pattern in many cities, which he describes as "Detroitification". Notice his description of the direction of many US cities:

"And now the same thing is happening to many American cities. Despite America’s unparalleled agricultural, mineral, scientific and geographic resources, cities across the country are in various stages of Detroitification. Chicago, Baltimore, New York, Los Angeles, Oakland, San Diego, Portland, Providence and Houston are all going the same way. And it doesn’t stop with municipalities either. California, Illinois and Kentucky—many states are headed for bankruptcy too."